A detailed insight into how the Internet of Things is transforming businesses in Asia-Pacific.

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Vodafone IoT Barometer 2017/18: Asia-Pacific

Vodafone IoT Barometer 2017/18: Asia-Pacific January 20182

Introduction

The Internet of Things (IoT) is entering an exciting phase, and its future looks especially bright in Asia-Pacific (APAC). While there’s still plenty of room for development, a number of factors make APAC a prime region for rapid IoT growth.

Many of the countries in the APAC region are striving to position themselves as global pioneers in digital technology — and if current trends continue, they may well succeed.

The APAC region has always had a strong focus on manufacturing, and benefits from a traditionally widespread availability of low-cost labour. This means that many APAC countries have direct access to cost-effective sensors, hardware and software. And in recent years — inspired by Germany’s “Industrie 4.0” — China, Japan and Korea have announced government plans to drive high-tech digital manufacturing, so the availability of IoT technologies within the APAC region looks set to increase further.1

There’s also been a big uptake of factory robotics and automation, especially in China. These advanced factories are paving the way for APAC countries to build IoT technologies even faster and more cost effectively. According to a study by Zebra Technologies, 46% of manufacturers in APAC expect to have a fully connected factory by 2022.2

The APAC region is benefitting from rapidly increasing 4G connectivity, with growth rates well above the global average and the world’s highest mobile internet user base.3 Alongside North America, Asia-Pacific is expected to lead the adoption of 5G technology — with operators in South Korea, Japan and China pushing hard to win the race. Thanks to rapid urbanisation and a large millennial population, consumers in APAC are eager for the latest high-tech innovations, and 5G will help providers to deliver this.

All of these factors are helping to position APAC as a potential global leader in IoT. While a recent report by IDC claims that South Korea, New Zealand and Singapore top the list in terms of IoT readiness, the future for the entire region looks promising. IDC predicts that the IoT market in Asia-Pacific (excluding Japan) will grow from $335.6 billion in 2016 to $565.5 billion by 2020.4

Our Barometer research reflects this exciting story. Adopters in APAC are pushing ahead with IoT faster than the global average. They’re seeing greater business benefits than other regions, and they’re extremely optimistic about the future of IoT — believing that it will shape the region’s economies and create thriving partnerships.

Read on to discover more.

About the researchThe Vodafone IoT Barometer is based on interviews with business leaders around the world about their experiences with IoT, and is an invaluable resource for anyone planning their own IoT projects. For the IoT Barometer 2017/2018, we interviewed more businesses than ever: 1,278 qualified respondents. We surveyed 13 countries across all major regions: US, Brazil, Ireland, UK, Germany, Italy, Spain, South Africa, China, India, Japan, Australia and New Zealand.

The APAC region covers the respondents from China, India, Japan, Australia and New Zealand.

Respondents came from retail, manufacturing, energy and utilities, healthcare, transport and logistics, automotive, consumer electronics, and the public sector. We had responses from decision makers in a range of organisations, from SMEs to some of the largest multinationals. We only surveyed qualified decision makers at senior manager level or above, but they represented a mix of departments.

All figures have been rounded to the nearest 1%.

Vodafone IoT Barometer 2017/18: Asia-Pacific January 20183

Executive summary

To understand the state of IoT in APAC, first it’s important to consider it within a global context. Adoption is growing worldwide. In fact, since we first started publishing the IoT Barometer in 2013, we’ve seen adoption more than double globally — from 12% in 2013 to 29% in 2017. But the story in the APAC region is particularly exciting.

1: APAC is leading the way• Adopters in APAC are pushing ahead with IoT faster than the global average. In the last

five years, they’ve seen the biggest uplift in adoption — from 12% in 2013, to 36% in 2017.

• APAC organisations using IoT are doing more of it. 88% have increased their adoption/use of IoT solutions in the past 12 months.

• IoT is increasingly seen as mission-critical. 77% of APAC adopters now see IoT projects as mission-critical to their business, compared to 67% globally.

2: The business benefits• Adopters in APAC are seeing significant benefits. More than half (53%) say they’re seeing

significant returns on their IoT investment. And 96% of adopters in APAC reported at least some tangible returns/benefits.

• IoT is increasing competitiveness in the APAC market. Over half (53%) of APAC companies said they’re seeing this benefit, compared with around a third in the Americas (35%) and Europe (33%). And 42% of APAC adopters are seeing improved brand differentiation as a result of IoT.

• It’s enabling new and increased revenue. 56% of adopters in APAC said IoT is allowing their business to offer entirely new services, compared to 48% globally.

3: Moving forward• Security concerns aren’t holding them back. Adopters in APAC are less worried about

security than other parts of the world. A large majority (83%) say they have adequate skills to manage IoT security, some way ahead of Europe (70%) and the Americas (65%).

• They’re looking for partners to collaborate with. Over half (53%) of APAC companies using IoT already collaborate with companies and partners. 87% of APAC adopters have increased their use of partners to deliver or manage IoT solutions, compared to 75% globally.

4: The next five years• Adopters in APAC are optimistic about the future. 85% of all APAC respondents believe that

IoT will have an enormous or sizeable impact on the economy in the next five years, compared to 79% globally.

• They believe it will transform business operations. The vast majority (91%) believe over 50% of business processes will include IoT sensing/control systems by 2022, compared to 79% globally.

• They expect security and privacy barriers to reduce. 79% expect security and privacy concerns will be greatly reduced, opening the way for much increased use of IoT.

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96%reported at least some

tangible returns

88%increased their adoption of IoT

83%have skills to manage IoT

security

85%think it will impact the economy

Vodafone IoT Barometer 2017/18: Asia-Pacific January 20184

1 APAC is embracing IoT

Adopters in APAC are increasing their use of IoT and integrating it with core systems and business processes.

36%of organisations in APAC have adopted IoT.

More adopters doing more IoTIn the last five years, we’ve seen the number of IoT adopters more than double globally. In 2013, adoption in the Americas was 14%. Now it’s 27%. Adoption in Europe has increased from 11% to 26% in the same time frame. But it’s the APAC region that’s seen the biggest uplift. In 2013, adoption was 12% — now it’s ahead of the pack at 36%.

This isn’t just about more organisations using IoT. Those who have adopted it are doing more of it. 88% of adopters in APAC have increased their adoption/use of IoT solutions in the past 12 months. And 83% of organisations believe that the sophistication of their IoT architecture has increased in the past 12 months.

But when it comes to adopting IoT at scale, they’re trailing behind the Americas. 19% of adopters in the Americas have at least 10,000 connected devices, compared with 7% in APAC. So while organisations are committed to IoT, there’s still room for growth.

77% of APAC adopters see IoT projects as mission-critical to their business.

IoT is becoming core to business strategyAs organisations do more IoT, it’s becoming core to their business. 88% of all APAC adopters have experienced a change to their core business strategy as a result of adopting new technologies, compared to 80% globally. They’re taking digital transformation seriously — technology is increasingly at the heart of strategic business decisions and intertwined with key objectives.

As businesses seek to overhaul their infrastructure and modernise their operations, there’s consensus that IoT is a crucial element of digital transformation. Three-quarters (75%) of APAC respondents agree that digital transformation is impossible without IoT, compared to 66% globally. And 81% of APAC respondents agree that IoT isn’t a standalone technology — they see it as intertwined with other digital initiatives like analytics and AI.

75% of all APAC respondents agree that digital transformation is impossible without IoT.

Figure 1. How embedded is IoT within APAC organisations?

China India Japan Australia NZ Global

Core business strategy has changed as a result of new technologies

The sophistication of IoT architecture has increased in the last 12 months

Digital transformation is impossible without IoT

81% 86% 63% 71% 69% 69%

91% 86% 57% 87% 67% 77%

79% 81% 86% 73% 58% 66%

Vodafone IoT Barometer 2017/18: Asia-Pacific January 20185

2 Adopters are achieving significant benefits

Adopters are scaling up their use of IoT because it’s delivering a return on investment. And adopters in the APAC region are more likely to report benefits than those in other regions.

96%of adopters in APAC have seen tangible returns on their IoT investment.

We’ve seen that the rate of IoT adoption is growing in APAC, and that companies are scaling up their use of IoT. But are their investments paying off? For at least half of the organisations we surveyed, the answer is a resounding yes. More than half of adopters in APAC (53%) say they’re seeing significant returns on their IoT investment. And 96% of adopters in APAC reported at least some tangible returns/benefits.

More generally, digital transformation is having a positive impact. 87% of all APAC respondents said their digital strategy is generating measurable business value.

From efficiency to growth APAC organisations are seeing many different benefits from their adoption of IoT. 55% say they are able to collect more accurate data and business insights as a result of IoT. And 54% are experiencing improved employee productivity as a result of IoT. But IoT isn’t just about driving efficiencies. It’s also helping to generate revenue. 42% reported increased revenue as a result of IoT, making APAC and the Americas the top regions.

IoT is helping adopters to unlock new revenue streams. We’ve found that the benefits of IoT have a tendency to snowball once you have IoT sensors in place, as the vast amounts of data collected can help organisations to identify new opportunities and branch out into untapped markets. 56% of adopters in APAC said IoT is allowing their business to offer entirely new services, compared to 48% globally.

Over half (53%) of APAC adopters are seeing improved competitiveness in the market as a result of IoT, compared with around a third in the Americas (35%) and Europe (33%). And 42% of APAC adopters are seeing improved brand differentiation as a result of IoT.

“Our target last year was to get a 30% increase in our revenue by implementing our IoT project throughout our operation — we reached this target at the end of the year. This year, our expectation is to get a 60% increase on the sales figures obtained in 2015.”

Global transport and logistics company, China

A healthcare organisation in New Zealand is using IoT to improve the operation of its ambulance service. Dispatchers now receive real-time updates on the availability and location of nearby ambulances, and the condition of patients can be transmitted to hospitals before they arrive. This allows medical staff to prepare for the patient’s arrival and deliver better treatment and outcomes.

Figure 2. What benefits are reported by IoT adopters in APAC?

Seeing improved brand differentiation as a result of IoT

32%

42%APAC

Global

Seeing improved competitiveness as a result of IoT

53%

40%

APAC

Global

Better collection of accurate data/business insights as a result of IoT

47%

55%APAC

Global

Experiencing improved employee productivity as a result of IoT

45%

54%APAC

Global

Increased revenue as a result of IoT

41%

42%APAC

Global

Vodafone IoT Barometer 2017/18: Asia-Pacific January 20186

3 Moving forward

Adopters in APAC aren’t letting concerns about security or standards hold them back. They’re looking to collaborate with partners to move forward and drive innovation.

87%of adopters have increased their use of partners to deliver IoT solutions.

Making security a prioritySince we first published the Barometer in 2013, security has topped the list of concerns for organisations. Around the world it remains a number one priority — but in the APAC region, attitudes are slightly more optimistic.

Out of all regions, adopters in APAC have the greatest confidence in their IoT security. They’re less worried about security skills shortages than other parts of the world. A large majority (83%) say they have adequate skills to manage IoT security, some way ahead of Europe (70%) and the Americas (65%).

Organisations in APAC are also taking concrete steps to address security concerns. Well over half (56%) of adopters are already working with security specialists, compared with 49% in the Americas and 37% in Europe. And 59% are working with specialist security providers, compared with 41% in Europe and 40% in the Americas.

Importantly, they’re maintaining a focus on security throughout the lifecycle of IoT projects. 48% of adopters in APAC scan for vulnerabilities after a launch, compared with 39% in the Americas and 34% in Europe.

83% of adopters in APAC say they have adequate skills to manage IoT security.

Building IoT ecosystems As IoT becomes more mission-critical to adopters in APAC, they’re realising they can’t go it alone — and that the fastest way forward is through collaboration. They’re looking for partnerships to help them fill skill gaps, grow knowledge and drive innovation. This can also help companies to strengthen their propositions, and unlock revenue streams from solutions they wouldn’t have been able to offer on their own.

Over half (53%) of APAC companies using IoT already collaborate with companies and partners, compared to 48% globally. 87% of APAC adopters have increased their use of partners to deliver or manage IoT solutions, compared to 75% globally. As this culture of collaboration grows, we’ll see the emergence of IoT ecosystems in APAC that benefit all parties involved.

“…an attack or virus is now something that can be taken as a ‘fact of life’. We can’t avoid it. The solution is to sort out more and more ways to address the attacks.”

Global transport and logistics company, China

“…bringing in the right people who understand commercial and consumer-grade systems helped a lot.”

Healthcare organisation, New Zealand

Figure 3. APAC adopters are collaborating and overcoming barriers.

China India Japan Australia NZ Global

Have adequate skills to manage IoT security

Are collaborating with companies and partners

Have increased their use of partners to deliver IoT in the last 12 months

93% 92% 50% 64% 62% 73%

55% 58% 43% 56% 43% 48%

98% 98% 43% 81% 57% 75%

Vodafone IoT Barometer 2017/18: Asia-Pacific January 20187

4 The next five years

Adopters in APAC are extremely optimistic about the future of IoT. They predict that today’s barriers to adoption will be reduced, and that we’ll see a growth of IoT ecosystems and partnerships.

85%of APAC adopters believe that IoT will have an enormous or sizable impact on the whole economy.

IoT will shape the futureIoT has come a long way since the first Vodafone Barometer in 2013. But what do adopters in APAC think the next five years will bring? There’s a lot of optimism in the region about the future of IoT.

85% of APAC adopters believe that IoT will have an enormous or sizable impact on the whole economy in the next five years. That’s even more than the global average of 79%. There seems to be widespread agreement that IoT will shape the future of business and transform economies around the world.

And this transformation will mean fundamental changes to daily business operations. The vast majority (91%) of APAC adopters believe that over 50% of business processes will include IoT sensing/control systems by 2022, a significantly higher share than the global average of 79%.

Barriers will fallLooking five years into the future, companies in APAC believe the barriers to IoT adoption will gradually be broken down. 79% expect security and privacy concerns will be greatly reduced, opening the way for much increased use of IoT.

And challenges around interpreting the vast amounts of data IoT is providing could be addressed too. 89% believe that more than half of enterprises will be using AI and machine learning to make sense of their data by 2022.

We could also see the skills gap shrink, as the number of mutually beneficial IoT partnerships increases. 91% of APAC respondents believe that companies will be collaborating with companies in different industries to build joint IoT solutions, compared to 82% globally.

Over the next five years we’ll see these IoT ecosystems grow and flourish, creating opportunities throughout the region.

“I can confidently say that all the parties involved in our industry would like to, and need to, invest more and more in IoT.”

Global transport and logistics company, China

New connectivity optionsAdoption is also likely to be spurred on by new networking technologies like 5G and Low Power Wide Area Network (LPWAN). Many organisations in APAC are already researching these new connectivity options to support their IoT initiatives. 31% are already considering the use of next-generation mobile technology such as 5G. And 12% are considering the use of LPWAN.

We believe that LP-WAN technologies, like Narrowband-IoT (NB-IoT), will drive an even greater wave of IoT adoption in the APAC region, with their promise of increased network coverage and greater cost efficiency.

Next steps We’ve talked a lot about how IoT is becoming intrinsic to the fabric of some businesses. But that doesn’t mean it’s too late to get started. IoT is still a long way from maturity in the APAC region. There are big gains to be achieved by companies rolling out even the smallest of programmes. And, as devices become more sophisticated and new networking options come online, IoT has never been more accessible.

If you have started, you’ll see the benefits increase as you do more and move away from point solutions. The biggest benefits will come when organisations can make full use of the data they’re collecting from IoT. Standardisation will go a long way to making that easier. And it will also make it easier for companies to forge the sorts of collaborations that will support the next wave of IoT adoption in Asia-Pacific. There’s never been a more exciting time for IoT in Asia-Pacific — so if you’re planning to get involved, the time is now.

Vodafone IoT Barometer 2017/18: Asia-Pacific January 20188

vodafone.com/iot

Vodafone Group 2018. This document is issued by Vodafone in confidence and is not to be reproduced in whole or in part without the express, prior written permission of Vodafone. Vodafone and the Vodafone logos are trademarks of the Vodafone Group. Other product and company names mentioned herein may be the trademark of their respective owners. The information contained in this publication is correct at the time of going to print. Any reliance on the information shall be at the recipient’s risk. No member of the Vodafone Group shall have any liability in respect of the use made of the information. The information may be subject to change. Services may be modified, supplemented or withdrawn by Vodafone without prior notice. All services are subject to terms and conditions, copies of which may be provided on request.

References1. https://www.vmware.com/ciovantage/article/digitalization-of-manufacturing-in-asia

2. http://online.zebra.com/mfgvisionstudy

3. http://blog.euromonitor.com/2016/03/asia-pacific-to-cross-four-billion-mobile-subscriptions-in-2016.html

4. https://www.idc.com/getdoc.jsp?containerId=prAP42904617

Contributors

Circle Research

Circle Research is a B2B market research company. Circle was founded in 2006 as an alternative to traditional research agencies who are consumer focused and deliver bland, uninspiring, academic outcomes. Our mission is to uncover hidden truths about your target market and help translate these into marketing and commercial success. Based in London, we work globally with ambitious B2B firms, including half of the Top 10 B2B Superbrands. In 2016, we won the Market Research Society’s Best Agency Award. Circle is part of the Next 15 Group PLC.

Learn more at circle-research.com, or follow us on Twitter @circle_research

Vodafone IoT

Vodafone Internet of Things (IoT) connects machinery, vehicles and other business assets to the network, delivering new functionality and enhanced services. Supported by more than 1,300 dedicated employees, Vodafone’s end-to-end IoT solutions make it easy for businesses to deliver and deploy IoT solutions across multiple territories. We have been highly rated by prominent industry analysts including Analysys Mason, Current Analysis and Machina Research. We have also been positioned as a Leader in the Gartner Magic Quadrant for Managed Machine-to-Machine Services.

For more information, visit vodafone.com/iot

Further reading

Vodafone IoT Barometer 2017/2018

Now in its fifth year, the Vodafone IoT Barometer 2017/18 paints a fascinating picture of the rapidly maturing IoT market worldwide, based on responses from 1,278 enterprises and public sector executives across 8 industries in 13 countries. It’s an essential guide to global IoT trends.

iot-mktg.vodafone.com/barometer2017

Securing the Internet of Things

Our white paper, Securing the Internet of Things, answers the six most common questions we’re asked about IoT security. Discover the skills you need to make a success of IoT, so you can push ahead with your digital initiatives.

vodafone.com/business/iot/securing-the-iot-your-six-biggest-questions-answered